On January 1, 20X3, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Shipreported retained earnings of $75,000 on the date of acquisition. The trial balances for Plimsol Company and Shipping Corporation as of December 31, 20X4, follow:ItemCurrent AssetsDepreciable Assets (net)Investment in Shipping CorporationOther ExpensesDepreciation ExpenseDividends DeclaredCurrent Liabilities.Long-Term DebtCommon StockRetained EarningsSalesDividend IncomePlimsol CompanyDebitCredit$ 160,000180,000125,00085,00020,00030,000$ 600,000$ 25,00075,000100,000210,000175,00015,000$ 600,000Shipping CorporationDebitCredit$ 115,000135,00060,00015,00015,000$ 20,00050,00050,000100,000120,000$ 340,000 $ 340,000Required:1. Provide all consolidating entries required to prepare a full set of consolidated statements for 20X4.2. Prepare a three-part consolidation worksheet in good form as of December 31, 20X4.

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Answered: 1. Provide all consolidating entries…

1. Provide all consolidating entries required to prepare a full set of consolidated statements for 20X4. 2. Prepare a three-part consolidation worksheet in good form as of December 31, 20X4.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On January 1, 20X3, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Ship
reported retained earnings of $75,000 on the date of acquisition. The trial balances for Plimsol Company and Shipping Corporation as of December 31, 20X4, follow:
Item
Current Assets
Depreciable Assets (net)
Investment in Shipping Corporation
Other Expenses
Depreciation Expense
Dividends Declared
Current Liabilities.
Long-Term Debt
Common Stock
Retained Earnings
Sales
Dividend Income
Plimsol Company
Debit
Credit
$ 160,000
180,000
125,000
85,000
20,000
30,000
$ 600,000
$ 25,000
75,000
100,000
210,000
175,000
15,000
$ 600,000
Shipping Corporation
Debit
Credit
$ 115,000
135,000
60,000
15,000
15,000
$ 20,000
50,000
50,000
100,000
120,000
$ 340,000 $ 340,000
Required:
1. Provide all consolidating entries required to prepare a full set of consolidated statements for 20X4.
2. Prepare a three-part consolidation worksheet in good form as of December 31, 20X4.

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